Japanese trading giant Itochu has signed a deal with Queensland company Vitrinite to develop a new coking coal mine in central Queensland, in a further sign of the resurgence of the coal sector since the global downturn.

Two workers lying next to a coal seam sample from the Karin Basin tenement in Central Queensland.
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Vitrinite managing director Nick Williams said the three-year funding deal with Itochu would allow the company to develop a feasibility study and business case for the mine in preparation for construction to begin. Itochu – which already has investments in three coal projects in Queensland, including Oaky Creek, Rolleston and Wandoan – will then have the option to fund their equity stake into production.

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Mr Williams said he was confident of raising finance for the Karin Basin tenement in the Bowen Basin, which already has existing infrastructure to transport coal to the coast, unlike the frontier Galilee Basin where Adani's project is based.

"Banks are still lending for coking coal deposits because obviously thermal coal is on the nose," Mr Williams told The Australian Financial Review.

"Metallurgical coal is seen as a different commodity – it's coal for steel. It [coking coal] is double or triple the price and it's for steel manufacturing as opposed to coal for power. We've just done a roadshow in Asia and there was a lot of interest in metallurgical coal. It's a no brainer. There is some interest in thermal coal but it has to be very high quality."

Queensland is experiencing a surge in investment in the coal sector, with federal Department of Industry, Innovation and Science figures in December showing there was $4.79 billion invested in new coal projects, including QCoal's Byerwen project, phase two of Anglo American's Grosvenor mine and Aquila Resource's Eagle Downs mine.

Mr Williams said investors were looking for the next generation of coking coal mines in Queensland as existing mines reached the end of their natural life. Vitrinite took the gamble to accelerate their exploration after the end of the last coal boom – a gamble that looks set to have paid off.

"There needs to be the next generation of coking coal projects. We see a gap in the market for our high-fluidity coking coal," he said. "We have literally only explored about 5 per cent of our project, but we're pretty confident we'll have a couple of hundred million-tonne resource. We feel like we're in a unique position."

Queensland Resources Council chief executive and former federal resources minister Ian Macfarlane said the exploration figures were a sign things were looking up in the state's minerals sector.

"Exploration is an important indicator of confidence in the resources sector and an investment that will grow jobs over the longer term," he said.

"It's an important industry and we will work with governments to ensure there is policy certainty for future investments and future jobs."

The other big drivers for minerals exploration in Queensland were copper, silver, lead, zinc and gold, following the Queensland government last year announcing targeted incentives for the north-west minerals province to encourage investment.